Fannie Mae's Home Purchase Sentiment Index (HPSI), which hit an all-time high of 86.5 in July, has now retreated for two consecutive months. The index was down 2.2 points to 82.8 in September. The HPSI is based on responses the company receives to six of the questions from its monthly National Housing Survey. Fannie Mae said the September index was reflecting growing consumer caution which caused four of the six components making up the index to fall.
The largest decrease was seen in the net share of consumers who expect mortgage interest rates to go down over the next 12 months. It fell 6 percentage points with 49 percent expecting rates to drop while 44 percent responded they did not think rates would move lower.
The second largest decline was in positive responses to whether now is a good time to buy a home. Responses to that question had been trending positive in recent months but the net positive share fell by 5 percentage points to 29% to match a previous all-time low reached in May.
There was also a significant 3 percentage point loss in the net share of people who are not worried about losing their jobs over the next year and the net share of Americans who say that home prices will go up was 1 percentage point lower than in August. from last month at 34%. The share of those who think it is a good time to sell a home was unchanged at 15 percent.
Household Income was the only HPSI component to increase in September with slightly more consumers than the previous month reporting that their household income is significantly higher than it was 12 months ago.
"The decline in the HPSI over the past two months from the survey-high in July of 86.5 adds a note of caution to our moderately positive housing outlook," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Downside changes came in particular from the HPSI components mortgage rate direction and good time to buy a house. In addition, the starter home tight supply and rising home prices as well as the unsettled political environment are likely giving many consumers a reason to pause or question their home purchase sentiment."
The Home Purchase Sentiment Index (HPSI) distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey® (NHS) into a single number. NHS is conducted monthly by phone among a panel of about 1,000 consumers, both homeowners and renters. They are asked about 100 questions to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances, and overall consumer confidence.